Revised Disclosure Rules for Resources Companies: Time to Transition

by K&L Gates LLP

A New Chapter 5
Listed mining and oil & gas companies have less than three months remaining to prepare for compliance with the new Chapter 5 of the Listing Rules. The enhanced reporting regime will be enforced from 1 December 2013.

Mining companies need to be aware of their increased disclosure obligations when reporting exploration results, mineral resources, ore reserves and production targets. Guidance Note 31 provides guidance on reporting obligations for mining companies. Other key changes relate to the use of: 

  • the competent person statement 
  • foreign and historical resource estimates 
  • cautionary statements.

Oil & gas companies also have additional disclosure obligations, which were designed by the ASX to align with the industry sponsored Petroleum Resources Management System (SPE-PRMS). Guidance Note 32 provides guidance on reporting obligations for oil and gas activities.

Key Changes for Mining Companies


Type of disclosure



Exploration results*

Requirement to disclose sampling and drilling techniques, specific drill hole and intercept information for material drill holes, and other information contained in Table 1 of JORC 2012 on an "if not why not" basis. This means that a Competent Person must either disclose the required information or justify why they are not disclosing.


Exploration targets

Extension of obligations to:

  • prohibit disclosing exploration tonnage and grade targets as a headline statement 
  • require such tonnages and grades to be expressed as a range 
  • include a description of the exploration activities and the timetable for achieving the target 
  • confirm whether targets are based on actual, or yet to be completed, exploration programs 
  • not report targets which are based solely on an exploration target or solely or partly on historical or foreign estimates of mineralisation.


Initial or updated mineral resource estimates

Requirement* to disclose certain material information including geological information, sampling and drilling techniques, estimation methodology, mining and metallurgical methods, and other information contained in relevant parts of Table 1 of JORC 2012 on an "if not, why not " basis.



Additional detail on mineral resources

Extension of obligations to disclose:

  • the basis on which there are reasonable prospects (ie. more likely than not) for eventual economic extraction 
  • where untested practices are applied in the determination of reasonable prospects, justification by a competent person of proposed practices 
  • where a mineral resource is reported at an average grade or above a cut-off grade that is not currently economic, the conditions under which it will become economic.


Ore reserves estimates*

Requirement to include a summary of all information material to the understanding of reported estimates, on an "if not why not" basis against relevant parts of Table 1 of JORC 2012 including all information regarding material modifying factors.

The estimate of the ore reserve must be based on a pre-feasibility or feasibility study (including a mine plan and detailed financial analysis) that demonstrates at the time of reporting, extraction could be reasonably justified. The key underlying assumptions and outcomes of the pre-feasibility or feasibility study must also be disclosed at the same time.

The requirement for such studies will become mandatory from 1 December 2014.


Disclosure of historical and foreign estimates

The prior obligation to obtain an ASX waiver in order to report historical and foreign estimates of mineralisation has been replaced. Companies will now be able to make such disclosures provided that it contains:

  • reporting information accompanied by a statement by a competent person attesting to that information 
  • a cautionary statement highlighting that the estimates are not reported in accordance with JORC 2012. 


Production targets and forecast financial information

Companies will be prohibited from disclosing production targets and forecast financial information that are based solely:

  • on exploration targets, or 
  • on a combination of inferred mineral resources and exploration targets, or 
  • or partly on historical estimates or foreign estimates of mineralisation (other than qualifying foreign estimates).

Other than where targets are underpinned by an operating mine or a combination of ore reserves and measured mineral resources, companies which disclose productions targets must also disclose supporting information such as:

  • material assumptions 
  • competent person sign off 
  • relevant proportions of each category of ore reserves (proved and probable), mineral resources (inferred, indicated and measured) and exploration targets which underpin the production target 
  • prescribed proximate cautionary statements in respect of production targets underpinned by inferred mineral resources or exploration targets. Proximate means being in the same page and in the same, immediately preceding or following paragraph 
  • where production targets are underpinned solely by inferred mineral resources:
    • a statement of factors indicating why the mining company believes disclosure is reasonable 
    • the level of confidence for estimation of inferred mineral resources and the basis for that confidence 
    • technical report by a competent person to support the production target  
    • an expanded prescribed proximate cautionary statement relating to the low level of geological confidence associated with inferred mineral resources.

Forecast financial information based on such production targets must also include all material assumptions and if a "significant proportion" of the production target is based on an exploration target, the implications for the forecast financial information if that exploration target was not included.


Competent person's consent

The prior written consent of the competent person will continue to be required before exploration results or estimates of mineral resources or ore reserves are announced for the first time. However, subsequent references to those results or estimates will now no longer need competent person sign off, provided that the subsequent report:

  • cross-references the earlier announcement 
  • the company confirms that: 
    • it is not aware of any new information that materially affects the information 
    • where the report concerns mineral resource or ore reserve estimates, that all material assumptions and technical parameters underpinning the estimate continue to apply.


Annual mineral resources and ore reserves statement

Statement in annual report to include:

  • a summary of the company's review of ore reserves and mineral resources 
  • a comparison of such holdings against those of the previous year and an explanation of material changes 
  • a summary of the arrangements and internal controls governing its estimation process.


Reporting of in situ or in-ground values

Extension of obligations to prohibit reporting of in situ or in-ground financial valuations which are based on exploration results, mineral resources or deposit size, ie before all the modifying factors affecting the economic value of a deposit have been considered and applied.

* Note: these are for "material mining projects" only. A "material mining project" defined as a mining project which "is, or is likely to be, material in the context of the overall business operations or financial results" of the company or its subsidiaries.

Key Changes For Oil & Gas Companies



Type of disclosure




Requirement for all publicly reported petroleum resources to be classified and reported in accordance with most specific resource classes within SPE-PRMS in which they can be reported, together with additional general requirements for reporting of petroleum resources and reserves.

This is intended to provide for greater consistency in reporting and to minimise misleading or confusing disclosure to investors. 


Exploration and drilling information

Removing the requirement for regular reporting for each drilling programme, with a company being required to only provide a progress update when the information is expected to have a material effect on a company's share price.


Petroleum reserves, contingent resources and prospective resources

Requirement to provide additional information to be disclosed when a company reports an initial, or materially updated, estimate of petroleum reserves, contingent resources or prospective resources for material oil & gas projects*. The additional information includes material assumptions, details of operator interests, types of permits or licences held, and a brief description of the basis of the calculation of such reserves and resources. These estimates must be prepared by a qualified petroleum resources and reserves evaluator and must only be issued with their prior consent.


Where there are material changes to information set out in previous disclosures, oil & gas companies must formally announce: 

  • an explanation of the new data and information 
  • how the new data and information has affected prior estimates 
  • the changes or additions to such prior disclosed information.


Annual reserves statement

Requirement for oil & gas companies to include an annual reserves statement in their annual reports which provides:

  • details of the company's total and aggregated 1P and 2P petroleum reserves (split out as developed and undeveloped and by product and geographical area) and contingent resources (if applicable) 
  • a reconciliation of their reserves (and/or contingent resources) against the previous year's with an explanation of material changes 
  • a summary of the arrangements and internal controls governing the estimation process.


Estimates of petroleum reserves and contingent and prospective resources

Requirement for all publicly reported estimates of petroleum reserves, contingent resources and prospective resources to include, among other things:

  • the evaluation date (the date the estimates are reported) 
  • the SPE-PRMS classification of reported petroleum resources 
  • if total petroleum initially-in-place, total resource base, estimated ultimate recovery, remaining recoverable resources or hydrocarbon endowment is being disclosed, disclosure of:
    • a petroleum reserve, contingent resource and prospective resource estimates 
    • whether and how each of the resource classes were adjusted for risk. 
  • the estimates being reported according to the entity's economic interest in the petroleum resource net of royalties (and not in relation to pure service contracts) disclosure of whether the deterministic or probabilistic method was used in preparing the estimates 
  • the conversion factor for gas to oil (where estimates are reported in BOE) and oil to gas (where estimates are reported in McfGEs).


Estimates of petroleum reserves

In addition to the requirements set out in item 5 above, an entity reporting estimates of petroleum reserves must ensure that: 

  • it has a high degree of confidence in the commercial producibility of the reservoir 
  • reported "reserves" include only commercially recoverable quantities of petroleum 
  • petroleum reserves are categorised into relevant SPE-PRMS sub categories reflecting the degree of uncertainty in the estimates 
  • the report discloses the portion of petroleum reserve estimates that will be consumed as fuel in production and lease plant operations 
  • the report discloses the reference point used to measure and assess the estimates 
  • a mean estimate is not disclosed 
  • if estimates are aggregated, the method of aggregation of estimates is disclosed 
  • if the estimate is reported beyond the field, property or project level, the estimates must be aggregated by arithmetic summation by category beyond that level of reporting, and a cautionary note must be included that aggregated estimates may be conservative or optimistic estimates "due to the portfolio effects of arithmetic summation" 
  • an explanation of how the petroleum reserves replacement ratio was calculated, if reported.


Estimates of contingent resources

In addition to the requirements set out in item 5 above, an entity reporting estimates of contingent resources must ensure that: 

  • a mean estimate is not disclosed 
  • if estimates are aggregated, the method of aggregation of estimates is disclosed 
  • if the estimate is reported beyond the field, property or project level, the estimates must be aggregated by arithmetic summation by category beyond that level of reporting, and a cautionary note must be included that aggregated estimates may be conservative or optimistic estimates "due to the portfolio effects of arithmetic summation".


Estimates of prospective resources

In addition to the requirements set out in item 5 above, an entity reporting estimates of prospective resources must ensure that:

  • if the estimate is reported beyond the field, property or project level, the estimates must be aggregated by arithmetic summation by category beyond that level of reporting, and a cautionary note must be included that aggregated estimates may be conservative or optimistic estimates "due to the portfolio effects of arithmetic summation" 
  • a cautionary statement is included, noting the discovery and development risks associated with the estimates and that further exploration and evaluation is required.

* Materiality of "material oil and gas projects" is defined on a similar basis to "material mining projects".

 Changes Affecting Both Mining and Oil & Gas Companies

Type of disclosure



Quarterly reporting

Producing entities must produce a quarterly report giving:

  • details of exploration activities 
  • details of production and development activities 
  • a summary of the expenditure incurred in these activities.

Exploration entities must report the above items, and in addition must report: 

  • details of all their tenements and beneficial interests in farm-in and farm-out agreements 
  • a quarterly cash flow statement in a prescribed form.


Cautionary statements

Cautionary statements in a prescribed form must be included in reports of estimates of prospective resources.  They must be:

  • as prominent as the reported estimate (same font, size, and colour) 
  • proximate to the reported estimate (same paragraph; if estimate is in a heading, cautionary statement must be included in the heading).

The cautionary statement must be included where the estimate first appears.  Subsequent references to the estimate must cross-refer back to the cautionary statement.


The Transition to the New Reporting Regime
Both the ASX and the JORC committee encourage early adoption of JORC 2012 prior to the mandatory start date of 1 December 2013. Any adoption, however, requires adherence to all aspects of the new Chapter 5 of the Listing Rules and JORC 2012 – there can be no "cherry picking".

Note that:

  • annual reporting requirements kick in at the end of the financial year ending June 2014 (where the company hasn't adopted the new regime before June 2013) 
  • there will be a requirement for a pre-feasibility study or a feasibility study to be completed in order to declare an ore reserve, which will come into effect on 1 December 2014.

Under the new reporting regime, mining and oil & gas companies have to provide enough information for investors to understand their results or estimates, the processes used to arrive at those results or estimates and any assumptions underpinning their announcements.

Inclusion of Table 1 disclosures in reports of exploration results or estimates of mineral resources or ore reserves is not a simple addition to an announcement – it involves considerable complexity, takes time and will lead to much longer announcements.

Companies must ensure that statements made in the Table 1 disclosure, and all other disclosures, are accurate in all respects. As with all announcements of forward looking statements, the Australian Securities and Investments Commission (ASIC) will monitor announcements of mineral or petroleum resource or reserve estimates to ensure they have a reasonable basis.

Mining and oil & gas companies must be prepared to fully comply with these reporting obligations by 1 December 2013.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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K&L Gates LLP

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